The fall in the pound begins to eat into living standards

FOR the 354 years for which there are data, Britain’s average annual inflation rate has been about 2%. So the news that inflation rose to 1% in September, up from 0.6% in August, may not seem significant. But it is bad news: there is a lot more inflation to come, and the big losers from rising prices will be the poor.

The obvious culprit for rising prices is the 15% drop in sterling since June. Britain imports nearly all of its clothes, and month-on-month inflation in clothing now exceeds 5%. However, elsewhere sterling’s decline has not yet been felt. Currency-hedging by wholesalers stops prices from rising immediately. Retailers pressurise suppliers not to raise prices, as demonstrated by a recent spat over the price of Marmite, a yeasty spread. The overall price of food did not budge in September (the average price of a jar of Marmite actually fell, as shops cut prices to lure customers).

Despite pricier clothes, inflation’s rise was caused largely by factors unrelated to sterling. It was already trending upwards from a low of -0.1% last October. In 2014-15 there were sharp drops in energy prices, which have fallen out of the year-on-year comparison used to calculate the rate.

Sterling’s slide will eventually make itself felt, however. Consumer-price inflation is likely to hit 3% in 2017. Though that is higher than the Bank of England’s 2% target, the bank is loth to raise interest rates lest it tip the economy into recession. Holding off is the right move, though a controversial one. Theresa May, the prime minister, has expressed reservations about loose monetary policy. And MPs are more willing than in the past to challenge the Bank of England’s independence. Addressing Mark Carney, the bank’s governor, David Davies, a Tory backbencher, tweeted that Mrs May “has got every right to tell you how to do your job!”

Politicians should know better than to interfere with the bank’s decision-making. Nonetheless, rising inflation does have its costs. Real weekly pay is already about 4% lower than in 2007. Nominal wage growth is just 2%. Once inflation goes above this rate, real wages will fall.

Rising inflation may be particularly damaging to the poor. They devote a large proportion of their income to food and energy, which are greatly affected by the value of sterling, whereas the rich spend more on services, which are not.

Welfare recipients will also suffer from high inflation, according to the Institute for Fiscal Studies, a think-tank. Usually, benefits rise in line with prices. No longer: last year, most working-age benefits were frozen in cash terms until 2020. Relative to previous plans, about 12m families are expected to lose an average of £360 ($442) a year in real terms thanks to the jump in inflation. The relatively poor folk who tended to vote Leave will suffer most.